topic Re: Why CC doesn't simply forbid Gift Card purchasing? in Credit Cards

Why CC doesn't simply forbid Gift Card purchasing?

Anonymous — Sun, 02 Jun 2013 02:59:03 GMT

If buying prepaid cards or gift cards like Vanilla Reload counts as "cash advance", why doesn't CC explicitly say so in the T&C?

Take CSP's T&C as an example:

"You do not earn points on balance transfers, cash advances, cash-like charges such as travelers checks, foreign currency, and money orders, any checks that are used to access your account, overdraft advances, interest, unauthorized or fraudulent charges, or fees of any kind, including fees for products that protect or insure the balances of your account. There is no maximum number of points that you can accumulate in the program. "

It already says"such as travelers checks, foreign currency, and money orders", and it sure can easily add "gift card" but none of the CC company chose to do so. So one can argue "gift card" isn't included in it. Though the CC issuer can end their business with you without any reason.

As far as I know, I havn't see any CCs' T&C include "gift cards", so what's the reason?

Re: Why CC doesn't simply forbid Gift Card purchasing?

navigatethis12 — Sun, 02 Jun 2013 03:03:35 GMT

A gift card is "cash-like", so it is covered. Funding bank accounts is obviously a cash advance. They, for whatever reason, just choose to let people do it and still earn points. Citi is the only one that I know that will recognise a financial institution purchase as a cash advance.

Re: Why CC doesn't simply forbid Gift Card purchasing?

jamesdwi — Sun, 02 Jun 2013 03:10:31 GMT

Because more than a few AMEX customers, especially businesses have a reason to purchase gift cards, and AMEX doesn't want to alienate card holders especially lucrative corporate customers.

Examples would include companies that want to give out gift cards to employees, partners as rewards and incentives, large companies could buy 100's of gift cards at a time, most retailers would prefer to have people buy giftcards with a credit card than a check even if its a bussiness account. its a lot more risk, and corporations surely don't want employees carrying $10,000 in cash into a store. Or the Grandma doesn't know what to give her grandson Johnny for Christmas so picks up a $100 gift card. Both are legitimate purchases done by valued AMEX customers.

Re: Why CC doesn't simply forbid Gift Card purchasing?

b_seeker — Sun, 02 Jun 2013 03:16:40 GMT

Because the majority of people don't charge up multiple times their monthy income per month on gift cards and buy them for legitimate purposes to give as gifts. Due to "abuse" or however you see it, this may end up pushing lenders to excluding them, since we know lenders can see at least some of what was in a transaction. I'd see this as unfortunate but if the choice is between nerfing my rewards or excluding my $500 in gift card gifts a year, I would take excluding the gift cards.

Re: Why CC doesn't simply forbid Gift Card purchasing?

TimeToRecover — Sun, 02 Jun 2013 03:29:06 GMT

James you are correct my company give amex cards for performance rewards and as prizes in meetings and such. AMEX is the corporate card choice so all of the cards are bought with amex.

Re: Why CC doesn't simply forbid Gift Card purchasing?

Anonymous — Sun, 02 Jun 2013 06:32:18 GMT

@Anonymous wrote:
If buying prepaid cards or gift cards like Vanilla Reload counts as "cash advance", why doesn't CC explicitly say so in the T&C?

Take CSP's T&C as an example:

"You do not earn points on balance transfers, cash advances, cash-like charges such as travelers checks, foreign currency, and money orders, any checks that are used to access your account, overdraft advances, interest, unauthorized or fraudulent charges, or fees of any kind, including fees for products that protect or insure the balances of your account. There is no maximum number of points that you can accumulate in the program. "

It already says"such as travelers checks, foreign currency, and money orders", and it sure can easily add "gift card" but none of the CC company chose to do so. So one can argue "gift card" isn't included in it. Though the CC issuer can end their business with you without any reason.

As far as I know, I havn't see any CCs' T&C include "gift cards", so what's the reason?

Basically like what b_seeker said.

Most people have a real daytime job / career and can't be bothered to do stupid stuff like this for some quick money.

And there are legitimate purchases with gift cards (i.e for birthdays, etc).

abuse is not limited to just gift cards. People abused UR Mall, ShopDiscover, Send money feature, Bill pay, etc. Some still continue to do so even today.

At the end of the day they end up crying and blaming the whole world because their accounts got closed.

Re: Why CC doesn't simply forbid Gift Card purchasing?

Open123 — Sun, 02 Jun 2013 10:50:13 GMT

@Anonymous wrote:
As far as I know, I havn't see any CCs' T&C include "gift cards", so what's the reason?

There are many legitimate reasons to purchase gift cards—for employee bonuses, customer rebates and gifts.

The issue here isn’t really purchasing gift cards per se, but fraud and financial compliance risks when they’re purchased at amounts exceeding 3, 5, or even 10 times someone’s reported income. The effort and resources necessary to ensure Federal regulatory compliance (willful blindness for Financial Inst carries severe penalties) is cumbersome enough for a profitable customer; for an unprofitable one, it would be sheer folly.

Re: Why CC doesn't simply forbid Gift Card purchasing?

Anonymous — Sun, 02 Jun 2013 11:11:47 GMT

Easiest thing to do is to just use your cards as you normally would in everyday life and you'll avoid these problems 99.9% of the time. If you need to get a gift for your best friends wedding and can't decide what to get, don't worry and get hima $100 Bed Bath and Beyond gift card. That's a lot different then stopping into CVS every 3 days and buying $504.95 of 'purchases'.

Or having a stated income of $40,000 but spending $9,000 a month on your credit cards. Or having a $5,000 line but putting 4x your CL throughout the month through it.

Re: Why CC doesn't simply forbid Gift Card purchasing?

Anonymous — Sun, 02 Jun 2013 11:41:33 GMT

In a word: People.

They're always gaming the system. Look at how long the US Mint thing was going on.

Re: Why CC doesn't simply forbid Gift Card purchasing?

Anonymous — Sun, 02 Jun 2013 12:54:03 GMT

enharu wrote:

Basically like what b_seeker said.

Most people have a real daytime job / career and can't be bothered to do stupid stuff like this for some quick money.

And there are legitimate purchases with gift cards (i.e for birthdays, etc).

abuse is not limited to just gift cards. People abused UR Mall, ShopDiscover, Send money feature, Bill pay, etc. Some still continue to do so even today.

At the end of the day they end up crying and blaming the whole world because their accounts got closed.

OK, this is why it is not so black and white. A certain poster here, with a name like enharu, recently posted a question about using Discover to transfer $1000 a month to his girlfriend to get ~ $120 cash back a year. Is this a real transaction? No, pure manufactured spend. Is it a lot of "abuse"? Not compared to some, but to those that don't do it, it is, and could lead to Discover reducing cash back, or stopping the send cash process, ruining it for those who use it for legitimate transactions.

Now the poster was advised not to do it, and so probably didn't, but the question arose, so I view this as a classic example of "Let him that is without sin cast the first stone" type of stuff.

Re: Why CC doesn't simply forbid Gift Card purchasing?

boomhower — Sun, 02 Jun 2013 14:34:46 GMT

@Anonymous wrote:
Easiest thing to do is to just use your cards as you normally would in everyday life and you'll avoid these problems 99.9% of the time. If you need to get a gift for your best friends wedding and can't decide what to get, don't worry and get hima $100 Bed Bath and Beyond gift card. That's a lot different then stopping into CVS every 3 days and buying $504.95 of 'purchases'.

Or having a stated income of $40,000 but spending $9,000 a month on your credit cards. Or having a $5,000 line but putting 4x your CL throughout the month through it.

+1. Don't try and game the system and you don't have to worry about it. But to answer the OP, they simply don't know for the most part. With travelers checks and the like they are rung up differently. With a gift card at most merchants it's just rung up on a regular reciept with your other purchases, it's not single out with a different transaction type that the CC companies could identify automatidly as being a gift card and treat the transaction differently.

Re: Why CC doesn't simply forbid Gift Card purchasing?

Open123 — Sun, 02 Jun 2013 16:34:14 GMT

@Anonymous wrote:
Now the poster was advised not to do it, and so probably didn't, but the question arose, so I view this as a classic example of "Let him that is without sin cast the first stone" type of stuff.

LOL...Amazingly enough, if there were a place where people are "above" the lure of "perk abuse," it's here!

I've seen many occasions where many here have opted to forgo applying for a new card missing out on (1) the free annual first year fee; (2) 50 - 100K MR bonus points; (3) and, 200K AA miles because the 2bm method was unethical.

However, perhaps it's because the cost of inquiries or a credit score is more important to some than money, miles or upgradable flights.

Re: Why CC doesn't simply forbid Gift Card purchasing?

Anonymous — Sun, 02 Jun 2013 16:39:44 GMT

Tons of people PC before AFs are due.

Re: Why CC doesn't simply forbid Gift Card purchasing?

parakleet — Sun, 02 Jun 2013 16:47:19 GMT

@Anonymous wrote:

OK, this is why it is not so black and white. A certain poster here, with a name like enharu, recently posted a question about using Discover to transfer $1000 a month to his girlfriend to get ~ $120 cash back a year. Is this a real transaction? No, pure manufactured spend. Is it a lot of "abuse"? Not compared to some, but to those that don't do it, it is, and could lead to Discover reducing cash back, or stopping the send cash process, ruining it for those who use it for legitimate transactions.

Now the poster was advised not to do it, and so probably didn't, but the question arose, so I view this as a classic example of "Let him that is without sin cast the first stone" type of stuff.

+1 This. Did those guys buying tens of thousands of dollars in vanilla reloads take a risk of getting shut down for abuse? Yes, absolutely. But with this subject, I find that the discussion too often turns to - "those guys had it coming" "I wouldn't ever do anything that would be considered abuse." People can get so self-righteous (on both sides) that it really turns the discussion nasty.

Re: Why CC doesn't simply forbid Gift Card purchasing?

Open123 — Sun, 02 Jun 2013 16:50:37 GMT

@parakleet wrote: People can get so self-righteous (on both sides) that it really turns the discussion nasty.

Nothing on the net really bothers me, since we're all sharing views.

If anything does, it would be "self righteous hypocrisy." This, I can't stand in any form.

Re: Why CC doesn't simply forbid Gift Card purchasing?

parakleet — Sun, 02 Jun 2013 16:59:03 GMT

@Open123 wrote:
@parakleet wrote: People can get so self-righteous (on both sides) that it really turns the discussion nasty.
Nothing on the net really bothers me, since we're all sharing views.

If anything does, it would be "self righteous hypocrisy." This, I can't stand in any form.

Amen to that. You're preaching to the choir on that one!

Re: Why CC doesn't simply forbid Gift Card purchasing?

b_seeker — Sun, 02 Jun 2013 17:14:00 GMT

@Anonymous wrote:
Tons of people PC before AFs are due.

Churning is a bit different than the VR method though. Banks accept those losses and realize many people may cancel or PC before the AF. It's just the nature of the game and they know it's needed to try staying competitive and expand customer base. A small amount of VRers can do more damage (for lack of a better word) than a larger number of people taking advantage of waived first year AF cards and sign up bonuses.

Re: Why CC doesn't simply forbid Gift Card purchasing?

Anonymous — Sun, 02 Jun 2013 17:17:42 GMT

@Open123 wrote:
@parakleet wrote: People can get so self-righteous (on both sides) that it really turns the discussion nasty.
Nothing on the net really bothers me, since we're all sharing views.

If anything does, it would be "self righteous hypocrisy." This, I can't stand in any form.

If that's truly a sore spot, tread lightly or avoid credit forums altogether, LOL! Several years ago I recall reading a post (on an unnamed forum) where someone went $50K in debt, funding an adoption, all the while planning to go BK on the debt. Anyone who said it was wrong got shouted-down for being unsupportive, LOL! The prevailing theme was: "You deserve a baby, honey! Ignore what some here are saying and enjoy the child". IIRC, that poster's main concern was keeping the home and to what extent she could skip out on hospital bills related to the child's many health issues.

It's the credit world we've all created and live in.

Re: Why CC doesn't simply forbid Gift Card purchasing?

Open123 — Sun, 02 Jun 2013 17:22:41 GMT

@b_seeker wrote:
@Anonymous wrote:
Tons of people PC before AFs are due.
Churning is a bit different than the VR method though. Banks accept those losses and realize many people may cancel or PC before the AF. It's just the nature of the game and they know it's needed to try staying competitive and expand customer base. A small amount of VRers can do more damage (for lack of a better word) than a larger number of people taking advantage of waived first year AF cards and sign up bonuses.

In my view, the main thing is about risk exposure.

I'd even think the perk abuse is a secondary concern. For instance, a person with a stated $75K annual income who purchases $50K per month means either (1) gross perk abuse which services to undermine the integrity of the program; (2) money laundering or for other nefarious means.

In either case, who cares? The best thing to do here in either case is just to purge and blacklist the customer until time immemorial.

Unless, there's a reason to look into it, such as Amex with a large number of customers who make huge purchases, but are reimbursed by their companies which can explain why some can spend 10X more than annual income.

Re: Why CC doesn't simply forbid Gift Card purchasing?

Open123 — Sun, 02 Jun 2013 17:36:08 GMT

@Anonymous wrote:
If that's truly a sore spot, tread lightly or avoid credit forums altogether, LOL!

Agreed! I just try to offer my views without appearing "judgmental," which isn't always possible.